Golden Prospect plc Registered number: 3172986 Interim Report for the six months ended 30 June 2006 CREATING VALUE
02 Golden Prospect plc Golden Prospect plc (AIM:GOL), the investment bank, today announced record interim results for the six months ended 30 June 2006. Basic earnings per share up 53% to 5.01p (2005: 3.26p) Net profit up 53% to 5.38 million (2005: 3.50 million) Profit before tax up 52% to 7.74 million (2005: 5.07 million) Gross profits up 74.5% to 11.26 million (2005: 6.45 million) Trading activities and realisations of portfolio investments produced gross profits of 7.18 million (2005: 5.14 million) which were up 40% Investment Banking activities produced gross profits of 4.08 million, more than triple the prior year (2005: 1.32 million) and represented 37% of the Group s total gross profits Shareholders equity plus unrealised gains on listed investments of 52.32 million, or 48.4p per share, up 9% since 31 December 2005 which comprised 47.01 million net current assets at market value (cost: 29.08 million) and 5.31 million represented unquoted assets and goodwill Cash at bank and in hand 14.17 million (2005: 6.27 million) Annualised return on shareholders equity of 32.7% Interim dividend of 0.75p (2005: 0.5p) Proposed name change to Ambrian Capital plc Commenting on the results, Malcolm Burne, Chairman of Golden Prospect plc, said: We are pleased to report our record performance for the first half of the year. Our Investment Banking activities have grown rapidly and now represent approximately 37% of the Group s gross profits. We have at the same time continued to successfully realise gains from our Trading and Investment Portfolios. We remain confident that our highly talented team of dedicated professionals can deliver even greater returns from the Group s growing range of activities and services.
Golden Prospect plc 03 CHAIRMAN S STATEMENT Results The Directors are pleased to report that the Group s profit before tax for the six months ended 30 June 2006 increased by more than 52% to a record 7,736,151 (2005: 5,071,532). Basic earnings per share increased by 53% to 5.01p from 3.26p. The Group s gross profits increased 74% to 11,260,531 from 6,449,815. Investment Banking activities accounted for approximately 37% of gross profits while realised profits arising from our trading and investment activities accounted for approximately 63%. The Group s shareholders equity at 30 June 2006 was 34,394,803 (30 June 2005: 28,872,184). The market value of listed investments at 30 June 2006 was approximately 39 million including unrealised gains of 18 million. The Group s cash resources increased to 14,166,055 compared with 6,267,222 at 30 June 2005. Dividend The Board declares payment of an interim dividend of 0.75p per share (2005: 0.5p). The dividend will be payable on 17 November 2006 to all shareholders on the register on 27 October 2006. Ambrian Investment Bank Investment Banking gross profits for the first half of 2006 were 4.08 million, up 210% from 1.31 million for the six months to 30 June 2005 reflecting the rapid growth of our Investment Banking activities and favourable market conditions. Ambrian Partners Limited Ambrian Partners Limited ( APL ), the wholly-owned corporate finance and stockbroking subsidiary, was involved in ten capital raising transactions with a total value of approximately 100 million, including three Initial Public Offerings on AIM. At 30 June 2006 APL had 29 retained corporate clients compared with 13 at the same time last year. APL has made significant progress in broadening the industry sectors in which it is active and has recruited additional talented staff. APL will replicate the industry specialist business model, which has been successfully implemented in the natural resources sector. Broadening sectoral expertise provides new growth opportunities and ensures the development of a corporate finance and stockbroking business that is sustainable over the long term. APL is now active in six industry sectors mining, oil & gas, soft
04 Golden Prospect plc CHAIRMAN S STATEMENT (Continued) commodities, renewable energy, telecommunications and technology where the quality of APL s research and the expertise of its sector teams have given APL a competitive edge. Over time, APL will consider entry into additional industry sectors but these must offer APL the potential to become a sector leader. The transaction pipeline for the second half of 2006 is healthy with mandated transactions in various industry sectors. Ambrian Commodities Limited In April 2006 Golden Prospect launched Ambrian Commodities Limited ( ACL ), an Associate Broker Member of The London Metal Exchange. ACL offers its clients a full range of commodities dealing services and is a broker/dealer of aluminium, copper, lead, nickel and zinc. It is also active in physical metals dealing. In August 2006 ACL announced that it would commence quoting and trading in precious metals (gold, silver, platinum and palladium). Its business is client-driven and its clients are located throughout the world and run through the entire metals supply chain, from miners to final industrial users. ACL made an immediate profit contribution in its first three months of trading after start-up costs and is rapidly becoming a significant arm of the Golden Prospect business. ACL business benefited from robust customer activity levels and high volatility in metals prices. ACL is actively exploring the possibility of becoming a broker/dealer in other commodities traded on regulated exchanges. Ambrian Asset Management Ambrian Asset Management Limited ( AAM ) obtained approval from the Financial Services Authority in February 2006 to manage and advise on investments for third parties. It plans to launch a series of funds focusing on specialist sectors, which complement the expertise of APL. In due course, we expect AAM to become a significant contributor of earnings generated from investment management fees and performance fees. Principal Investments Gross profits from realisations from the Managed and Strategic Portfolios for the first half of 2006 were 7.18 million, up 40% from 5.14 million for the half-year ended 30 June 2005.
Golden Prospect plc 05 CHAIRMAN S STATEMENT (Continued) During the first half of 2006 further partial disposals were made within the Strategic Portfolio while, at the same time, certain holdings in the Managed Portfolio were realised as and when liquidity permitted. The Group continues to be committed to its shareholdings in Jubilee Platinum, Samson Oil & Gas, Mano River Resources, Uruguay Minerals, Anglesey Mining and Centamin Egypt. These companies are performing strongly with excellent news on their various exploration or development programmes. Each of these companies can be expected to make important contributions to the principal investment returns in the future. The principal investment policy continues to favour the highest portfolio weighting in gold and precious metal shares (gold, silver, platinum). Energy (oil and gas, coal and particularly uranium) are also still attractively priced. As always, the investment policy has been focused on companies that complement our investment banking activities, have geographical spread and the capability of either going into production in the medium term or being absorbed by a major competitor in an intensifying merger and acquisitions marketplace. The rationalisation leg of the current cycle continues apace and the next stage should be the discovery phase of new deposits (reflecting considerable financing of exploration), which will keep strong focus on the resource sector in terms of investor interest. The Group remains at the centre of financing the natural resources/commodity sector. The rapidly expanding BRIC economies (Brazil, Russia, India and China) continue to provide very robust conditions in most commodity markets. As supply and demand is substantially out of balance for nearly all commodities, the Directors believe that the bull market in this sector although volatile from time to time, is still in an upward cycle. The shortest commodities bull market lasted 15 years, the longest 23 years so, in theory, the current cycle still has a long way to go with the US commodity price index adjusted for CPI still indicating that commodity price levels are yet to reach previous peaks. Investment funds, both large and small, are demonstrating a greater appetite for measured risk where the case for investment can be reasoned by virtue of fundamental analysis and not by momentum trading, i.e. short-term volatility as witnessed recently in nickel and copper. Certainly the base metals have provided investors with substantial returns in the recent past but must now be deemed risky at these higher levels as speculation is beginning to distort fundamentals. The Directors therefore favour increasing exposure to
06 Golden Prospect plc CHAIRMAN S STATEMENT (Continued) precious metals. Demand from vast liquidity pools such as pension funds, insurance companies, trusts and other financial institutions is being satisfied by the introduction of ETF s (Exchange Traded Funds), logically sensible investment vehicles with their underlying assets being physical metal and bullion, as in the case of gold, silver and platinum, for example. It is this supporting investment argument that attracts management to precious metals as opposed to other base metals and minerals at this time. Capital Shareholders equity plus unrealised gains on listed investments as of 30 June 2006 was 52.32 million, or 48.4p per share based on 108.1 million shares outstanding. 47.01 million comprised net current assets at market value (cost: 29.08 million) and the balance of 5.31 million represented Minesite, Exploration Assets and Goodwill, at cost. Golden Prospect repurchased 325,000 ordinary shares at an average price of 49.85p per share, for a total cost of 162,000 in July of 2006. Further share repurchases will be dependent on the capital needs of the Group and prevailing market conditions. The Golden Prospect Employee Benefit Trust (the GP EBT ) holds 3,300,000 Golden Prospect ordinary shares, which represents 3% of the Group s issued share capital. The Group is committed to aligning the interests of its employees with its shareholders. The GP EBT may make further purchases of Golden Prospect shares to continue this process. Future Strategy We have made significant strides over the past two years to transform the Group from a resources focused investment company into a broadly based investment bank operating in four related business areas: principal investing; corporate finance and stockbroking; commodities dealing; and investment management. Our objective is to build a highly profitable investment bank capable of generating recurring income from its various business units over the long term. Over the years the Group has built a strong track record as a principal investor in the resources sector. The Group s shareholders equity plus unrealised gains on its listed investment portfolio has grown by 248% since January 2002 (compound annual growth of 31.7%).
Golden Prospect plc 07 CHAIRMAN S STATEMENT (Continued) We have not only been able to identify undervalued investment opportunities but we have also been successful in realising investment gains for cash. However, gains on our investment portfolio are taxed at the Corporation Tax Rate of 30%. To make our future investment process more tax effective we intend to establish a range of investment funds open to outside investors focused on sectors in which the Group has expertise. The first fund that we intend to launch and invest in will be a Precious Metals investment fund which will be registered in Guernsey and listed on the AIM market of the London Stock Exchange. By operating within the fund structure, the gains on investment disposals will not be subject to tax within the fund so enabling enhanced investment performance. Ambrian Asset Management Limited, our FSA regulated investment management subsidiary, will with the benefit of the Group s expertise in the sector manage the investments made by the Precious Metals investment fund. Ambrian Asset Management will receive an annual fee for managing the fund and may receive an additional performance fee based on the performance of the fund. To reflect the broadening of the Group s activities, it is intended to call an Extraordinary General Meeting to change the Group s name to Ambrian Capital plc in the near future. A name change from Golden Prospect to Ambrian Capital will more readily identify the group s position amongst its peers in the quoted investment banking sector of the market. With regard to the non-quoted assets, i.e. our joint venture exploration properties and our 25% shareholding in Minesite.com, it is expected that these will be separately floated in the next six months. In summary, we remain confident that the excellent returns obtained over many years can be sustained, if not improved, as a result of the transformation of the Group we are currently undertaking. M A Burne Chairman 19th September 2006
08 Golden Prospect plc UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT Six Months ended 30 June 2006 Six Six Months Months To To 30/6/06 30/6/05 Operating income 11,260,531 6,449,815 Gross profit 11,260,531 6,449,815 Other operating income dividends received 5,093 40,184 Administrative expenses (3,641,632) (1,416,379) Operating profit continuing operations 7,623,992 5,073,620 Interest receivable 148,532 54,640 Interest payable and similar charges (36,373) (56,728) Profit on ordinary activities before taxation 7,736,151 5,071,532 Tax on profit on ordinary activities (2,351,704) (1,571,121) Profit on ordinary activities after taxation 5,384,447 3,500,411 Profit per ordinary share basic 5.01p 3.26p
Golden Prospect plc 09 UNAUDITED CONSOLIDATED BALANCE SHEET As at 30 June 2006 30/6/06 30/6/05 FIXED ASSETS Tangible fixed assets 203,728 106,367 Intangible assets 4,414,611 4,300,614 Investments 695,418 465,560 5,313,757 4,872,541 CURRENT ASSETS Investments 21,401,402 22,525,028 Debtors 6,986,820 676,947 Cash at bank and in hand 14,166,055 6,267,222 42,554,277 29,469,197 CREDITORS: Amounts falling due within one year 13,473,231 5,469,554 NET CURRENT ASSETS 29,081,046 23,999,643 TOTAL ASSETS LESS CURRENT LIABILITIES 34,394,803 28,872,184 CAPITAL AND RESERVES Called up share capital 10,806,121 10,726,121 Share premium account 10,849,383 10,803,383 Merger reserve 1,245,256 1,245,256 Profit and loss account 13,307,600 6,097,424 Employee benefit trust (1,813,557) EQUITY SHAREHOLDERS FUNDS 34,394,803 28,872,184
10 Golden Prospect plc UNAUDITED CONSOLIDATED CASH FLOW STATEMENT Six months ended 30 June 2006 Unaudited Unaudited Six Six Months Months To To 30/6/06 30/6/05 Net cash inflow/(outflow) from operating activities 11,612,276 2,607,691 Interest receivable 148,532 54,640 Interest payable (36,373) (56,728) Net cash inflow/(outflow) from returns on investment and servicing of finance 112,159 (2,088) Taxation (505,794) Capital expenditure and financial investment Payments to acquire intangible fixed assets (29,895) (98,983) Payments to acquire tangible fixed assets (87,943) (81,855) Payments to acquire fixed asset investment (105,736) Net cash inflow/(outflow) from capital expenditure and financial investment (223,574) (180,838) Equity dividend paid (802,959) Net cash inflow/(outflow) before financing 10,192,108 2,424,765 Issue of ordinary share capital 126,000 Bank loan repaid (1,500,000) Net cash inflow/(outflow) from financing (1,374,000) Increase in cash 8,818,108 2,424,765 NOTES TO THE UNAUDITED INTERIM ACCOUNTS Six months ended 30 June 2006 1 The calculation of earnings per share is based on the profit after tax of 5,384,447 (Period ended 30 June 2005 3,500,411) and on the number of shares in issue being the adjusted weighted average number of shares in issue during the period of 107,544,081 (Period ended 30 June 2005 107,261,208). 2 The interim statement for the six months ended 30 June 2006 is unaudited and was approved by the Directors on 18 September 2006. The financial information set out above does not constitute statutory accounts within the meaning of s.240 of the Companies Act 1985. 3 The accounting policies remain as stated in the Annual Report for the year ended 31 December 2005 apart from the definition of turnover. For the current year, operating income is used to describe revenue rather than turnover as required by the Companies Act 1985, as the directors consider it better reflects the nature of the business. Operating income comprises institutional brokerage commission and net trading profit or loss on trading positions, corporate broking retainers, commodity commissions, deal fees (comprising cash based on advisory fees and the award of options to the Group) and placing commissions. The comparatives reflect this change in policy 4 Copies of the Interim Report are available to the public free of charge from the company at Manfield House, 5th Floor, 1 Southampton Street, London WC2R 0LR during normal office hours, Saturdays, Sundays and bank holidays excepted, for 14 days from today.
Golden Prospect plc SHAREHOLDER AND COMPANY INFORMATION Golden Prospect plc Ambrian Manfield House 8 Angel Court 1 Southampton Street London EC2R 7HP London WC2R 0LR www.ambrian.com www.goldenprospectplc.com Company Secretary and Registrars Registered Office Capita Registrars Limited Cargil Management Services Limited Northern House 22 Melton Street Woodsome Park London NW1 2BW Fenay Bridge Huddersfield HD8 0LA Company Registration Number: 3172986 Perivan Financial Print 207751
Golden Prospect plc Manfield House 1 Southampton Street London WC2R 0LR T 020 7395 1930 F 020 7395 1931 E mail@goldenprospectplc.com www.goldenprospectplc.com Ambrian 8 Angel Court London EC2R 7HP T 020 7776 6400 F 020 7776 6420 E info@ambrian.com www.ambrian.com